In my post “40 Acres and a Mule” I estimated the value of forty acres today, along with examining the population immediately post-Civil War, to get some (very conservative) notion of what restitution for slavery would have amounted to if it had been made as promised. (A big “if”.) There I arrived at $123 billion worth of land and equipment. This is surely a serious underestimate. I will explain why here.

The forty acres were an attempt to account for (only the economic part of) what slavery had denied: Family wealth and the means to earn a living. How closely would that amount really approximate the absolute disparity in wealth that existed in the southern U.S. between whites and blacks in 1860 to 1870?

Wealth on the Eve of the Civil War

Looking at the Census for 1860, you can find statistics for “Real and Personal Estate” by state and county. [1] You discover that the per-capita wealth for states allowing and promoting slavery was $1042, nearly half of which was wealth in the form of other human beings. For northern states, per capita wealth was only measured at $546. The total wealth of the slave states (8.03 MM free people) was about $8.3 billion. Including enslaved people in the per-capita calculation you get $706 per capita.

Estimating the Scale of Reparations

The simplest way to estimate the amount of wealth that fairly should be distributed somehow as reparations would be to start with the $706 per capita figure for the southern states. With this flattened approach you arrive at $2.8 billion of wealth that might rightly belong to the enslaved people, or $84 billion when adjusted for the same purchasing power in 2020 dollars.

However, for the purposes of restitution it seems entirely right that all wealth directly attributable to slavery ($3 to $3.5 billion in 1860, $105 billion in 2020) [2] ought to belong to those formerly enslaved. After all, this was the amount that the economy estimated their exploitation was worth.

Furthermore, land and some personal property ought to be counted as wealth previously denied, in serious need of redistribution. Starting with the fact that one-third of the southern population was in slavery in 1860, With this approach we get (1/3 of $8.3 - $3.5) billion , which is about $44 billion in 2020 dollars. So we actually arrive at a very similar figure to a fully realized “Forty Acres”program: $44 billion plus $105 billion in 2020 dollars.

Growth of Personal Wealth

There’s a serious disconnect with these amounts though. Wealth has grown more than purchasing power. The conversion rate from 1860 to 2020 – using the CPI here – is 30 times – one dollar in 1860 is worth thirty today. Yet, the total wealth of the United states, as measured by the Census at the time, was much less than 1/30 of the (conservativly) estimated $100 trillion of today’s total household wealth in the U.S. [9] It would make more sense to compare relative shares of the nation’s wealth today, or calculate household wealth growth since 1860.

Even when adjusting for population – the 1860 population was roughly 1/10 of today’s population – the total U.S. household wealth grew from $20 billion ($600 billion in CPI adjusted 2020 dollars) to$10 trillion, giving a per capita amount of $321,000. Some estimates have the per capita U.S. wealth at $432,000. These estimates, and my crude calculation take into account both real-estate and financial assets. Without real-estate, the U.S. per capita wealth is about $170,000.

Holding the population constant while accounting for economic growth is kind of nonsensical but it provides a way to estimate a lower bound for a multiplier on per capita wealth. You might think of the $90 trillion remaining as wealth generated by immigration and population growth. Anyhow this gives a lower end estimate in 2020 dollars for the redistribution of wealth that rightly should have taken place after 1865. That would be sixteen times the wealth in 1860 after adjusting for purchasing power.

Under that approach we’d have roughly $123to $150 billion times a growth of 16x, around $2.25 trillion. Seems reasonable in light of the scale of recent U.S. Federal spending.

While it might seem like a fantastically large amount, it makes sense – and actually appears as a major underestimate – when you compare that growth rate to the U.S. stock market returns since the 1870’s. Since then returns from the market have been over 20,000 times. [3] [4] Of course it’s not as if people with access to the stock market invested all their non real-estate assets in the market, but the market gains give an strong indication that huge economic growth occurred.

Why Growth in Wealth Rather Than Purchasing Power Matters

After slavery ended, with little or no compensation forthcoming, newly freed people weren’t able to participate early in the tremendous growth of the economy. They missed out on decades of wealth building opportunity through compounding returns. Think of those retirement calculators you’ve probably used: Starting retirement savings in your thirties or forties instead of your twenties puts you way behind. And, even ten, twenty, fifty, one hundred years after emmancipation, the economic playing field wasn’t close to level.

There are three main parts of wealth accumulation in the U.S. over the last 150 years:

  • Business and Investing The markets are only an indicator of how fast part of the economy grew: Most white people didn’t directly participate in the markets either, but the markets reflect the publically traded slice of the larger set of businesses, and we can assume are some indication of the wealth building opportunity available to those allowed to start businesses without interference. Many more whites were able to legally own and operate businesses and those businesses, along with legal and practical (earning decent money) means to save and invest, provided the basis for building generational wealth within families and communities.
  • Proffessional Advancement Improving ability to get well paid work, through moving to growing regions and higher levels of education. With more income, one can save in the form of investments and real-estate
  • Home Ownership The other means for building wealth – homeownership – is a complicated topic: According to the Schiller data, houses have only increased in value at the overall rate of inflation since 1890 (that’s a decent savings account.) Homeownership rates were, and are, much higher among white Americans than black Americans: 71% vs 41% in 2017, and this doesn’t speak to the values of those homes. Recently though, home values have shot way up, to the point that it appears residential real-estate would have been a better investment than the U.S. stock market, with less risk. [8]

Blacks – who were starting out with little to no wealth – were mostly excluded from high paying and prestigious proffessions and prevented from owning lucrative businesses, through a variety of social and legal means. Home-ownership was made difficult as well. Success was punished.


If you’re starting with nothing, an education theoretically gives you a way into a secure proffession, perhaps with some social capital attached as well. You could begin to achieve some financial stability and start the process of saving for the next generation.

Throughout the South, under segregation, blacks were denied access to good primary education (“separate but equal”.) With some exceptions higher education was out of reach: Practically (no high-school,) legally (whites only colleges,) and financially. While the North didn’t enforce legalized segregation the practical barriers remained and there were quotas to limit non-white college enrollment. [10]

Proffessional Advancement

Those Blacks who did have qualifications faced discrimination in hiring and also in promotions, The job discrimination was both common and legal until the 1960s. After the 1960’s most forms of job discrimination have been outlawed but still occur in more and less subtle ways. [11]

Home Ownership

Home loans were denied (not underwritten, basically the same as denial) to those living in black neighborhoods – oficial policy of the FHA for many decades after the 1930s – (“red-lining”,) [14] At the same time, often prevented from buying homes in other neighborhoods (“covenant deeds”.) [12] [13] That meant a primary method of accumulating some assets and stability for the lower middle class – home ownership – was out of reach for many.

Punishing Entrepreneurship

All over the country, black business owners couldn’t get bank loans as easily as whites.

Those Black Americans who were successful anyhow faced many obstacles in running and growing their businesses, including destruction of their property and murder. [5], [6], [7]

When thinking about business as a machine for compounding wealth, even a small drag on the compounding effect will have out-sized results decades later. This drag came in the form of loss of business due to discrimination, occasional destruction of property and terrorism, with no access to rule of law to remedy any of it.

Big Picture

With all these obstacles it would be impossible to earn enough to build wealth at anything like the rate whites could.

Working out these numbers isn’t the hard part. Doing something with them is the hard part.